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FX levels to watch – EUR/USD, GBP/USD and AUD/USD

Short-term upside for EUR/USD, GBP/USD, and AUD/USD is providing respite from a wider downtrend. However, this could give us an opportunity to look for shorts once more. 

Source: Bloomberg

EUR/USD rallies from key support zone

EUR/USD has once again failed to break below the crucial $1.1510-$1.1554 support zone. A break below that level would point towards a continuation of the wider bearish trend that has been in play since February.

The question over whether we will see a wider break higher would come with a break above the $1.1721 peak. A rally above there would provide a double bottom, while a break above the $1.1852 level would have wider bullish implications. Until then, there is a good chance we will continue to set lower highs, with a break below $1.1510 providing the bearish signal for the longer term.

GBP/USD downtrend intact, with upside unlikely to last

GBP/USD has sold off sharply throughout the week so far, with the price hitting a seven-month low yesterday. With the price moving higher this morning, there is a good chance we will see further upside play out for the near term.

However, this is perceived as a precursor to further downside as we look for a continuation of the wider bearish trend. A bearish outlook remains in place unless we break above the $1.3315 level, with short-term upside looking like an opportunity to get short once more.

AUD/USD rebound could provide shorting opportunity

AUD/USD has also rebounded this morning, following a drop below the $0.7345 support level earlier in the week.

The question is whether we are retracing the shorter-term $0.7444-$0.7323 move, or else the decline from $0.7677. Only a rally through the $0.7444 mark would signal a wider retracement. Until then, look for a potential turn lower at the 61.8% or 76.4% retracements ($0.7397 and $0.7415). 

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